Australia’s coffee prices a real grind

He may have earned more than $11 million last financial year, but
BHP Billiton
chief executive
Marius Kloppers
was visibly shocked at the price he was expected to pay for coffee in Perth last Wednesday morning.

His caffeine hit cost him $5.50. Addressing a business forum not long afterwards, Mr Kloppers pondered whether coffee prices were partly responsible for deterring workers moving from the eastern states to the west, where miners are desperate for skilled labour.

“That’s a 150 per cent premium on what I would pay in London and 50 per cent premium on what I would pay in Melbourne," Mr Kloppers claimed.

Was he right? The Australian Financial Review sent out its coffee drinkers around the globe – and Australia – to places where a mining executive like Mr Kloppers would get his daily caffeine to find out. The quest was also to uncover just what local factors drive the price of a cup of coffee.

First stop – China. At 90 degrees, a locally owned chain in Shanghai, a latte costs 13 yuan, or about $2.

Mr Lu, from 90 degrees, insisted the price of a coffee has gone up recently because the price of milk, coffee beans and labour had risen.

But at the expat haunt, Wagas, with its swanky décor and free Wi-Fi, a latte will set you back between 25 and 33 yuan, or up to $5.21, showing pricing isn’t just a matter of coffee bean and milk prices.

In Washington, Ville Kaila had just downed a $US2.94 macchiatto outside DolceZZa, an “artisanal gelato" and coffee bar, minimalist and modern in black, white and stainless steel, in Bethesda. The price included a 6 per cent sales tax. “I think it’s kind of cheap," Mr Kaila said, compared with prices in his native Finland.

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Prices are similar at the Coffee Society at The Oaks in Cupertino, a Silicon Valley landmark frequented by Apple employees. A double espresso costs up to $US2.44 and a latte from $US3.52 for a 12 oz to $US4.60 for a 20 oz.

Are Perth prices 150 per cent more than in London? Le Péché Mignon in London’s inner-north suburb of Highbury is just the sort of spot where the chief executive of a mining giant might get his take-away coffee. The ambiance is French, the clientele Anglo-Australian and a takeaway flat white costs £2 ($3.14).

Scottish-born barista Greg Boyce said Londoners were paying slightly less for better quality coffee compared with several years ago because there was a fussier clientele and more competition.

Coffee bean prices have been stagnant for some time – contradicting Shanghai’s Mr Lu – leaving milk prices, wages for labour and rent as the most cited factors in the price of a coffee.

In France, coffee prices can vary depending on whether you choose to stand or sit. Drink your coffee at the bar and you might get a 20 per cent discount, but an espresso sipped at Café de Flore in Paris costs €4.10 ($5.20).

Back in Australia, in Canberra, Dom Calabria, the most famous cafe proprietor in Australian political circles, has a lot in common with Mr Kloppers. He has to recruit staff from a highly paid tight labour force to staff his Aussie’s Cafe in Canberra’s Parliament House – but a cup of coffee still costs only $3.20.

Yet, across the Nullarbor, as Mr Kloppers’ complaint revealed, it is near impossible to find a sub-$3.50 coffee.

If he had ventured beyond Perth’s high-rent main streets, however, he may have found West Perth cafe owner Peter Barbouttis, who sells a generous-sized cappuccino for $3.50 at Pranzo.

“We’re on a back street so can charge 20¢ to 30¢ less than those on the main road," Mr Barbouttis said.

“If you go into the CBD, there’s another 20¢ or 30¢ a cup you need to add to the price."